Group Asks SEC to Address Impartiality Over Disclosure of Preliminary Vote Tallies

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By Yin Wilczek

May 28 — The Council of Institutional Investors again asked the Securities and Exchange Commission to take action over what it termed the continued “lack of impartiality” over the disclosure of preliminary voting information.

In a May 26 letter to Keith Higgins, director of the SEC's Division of Corporation Finance, CII asked the staff to reconsider its previous stance that 1934 Securities Exchange Act Rule 14a-2(a)(1) may not be extended to the disclosure of preliminary vote tallies short of a commission rulemaking.

The rule exempts from the SEC's proxy solicitation requirements any solicitation that, among other measures, “does no more than impartially instruct the person solicited to forward a proxy to the person, if any, to whom the person solicited desires to give a proxy, or impartially request from the person solicited instructions as to the authority to be conferred by the proxy and state that a proxy will be given if no instructions are received by a certain date.”


CII also asked the staff to advise Broadridge Financial Solutions, when choosing voluntarily to provide vote status information to companies, to provide “only the interim total number of shares voted for each balloted item.”

That will end Broadridge's “practice of selectively disclosing detailed preliminary voting information to companies,” CII said. In the short term, the approach will allow the staff to “achieve the goal of impartiality” in the disclosure of preliminary voting results at “minimal cost to Broadridge.”

CII and others, including the SEC's Investor Advisory Committee (IAC), previously raised concerns that Broadridge may be distributing preliminary voting results in a selective and nonimpartial manner.

There is a pending IAC recommendation that the SEC require brokers and their intermediaries to act “in an impartial and ministerial fashion throughout the proxy process, including the disclosure of preliminary voting information”.

CII told the SEC that in the long term, consistent with the IAC recommendation, “we continue to support SEC staff guidance interpreting Rule 14a-2(a)(1) to require interim vote tallies on ballot items to be provided to any participant in an active solicitation upon request.”

CII's letter was signed by General Counsel Jeff Mahoney, who May 28 told Bloomberg BNA that other than being thanked for the correspondence, he has not yet heard from the SEC.

A commission spokesman did not immediately respond to a request for comment.

In April, Corp. Fin. Chief Counsel David Fredrickson said the staff was considering the concerns raised over Broadridge's distribution of preliminary voting results.


Meanwhile, Chuck Callan, Broadridge's senior vice president of regulatory affairs, told BBNA that as a practical matter, issuers may not wish to involve Broadridge in providing their vote status information to shareholders. “While recognizing there is no law, rule, regulation, or contract requiring that votes be provided to entities that do not furnish a proxy card, Broadridge will continue to look for ways to apply technology solutions to address the practical needs of all participants in the proxy distribution process,” he said in an e-mail.

Callan also said that Broadridge intends to act impartially in its role as agent for broker-dealers and custodian banks. “If there is concern that the practice of providing interim voting information is inconsistent with that objective, Broadridge welcomes clarification from the SEC and other regulators, whether that be through interpretive guidance, a staff legal bulletin, or rulemaking,” he said.

The activity faulted by CII and the IAC doesn't occur all that often, according to Callan.

“Broadridge receives a couple of requests a year for interim voting status information from proponents that ask us to distribute an exempt solicitation (a shareholder letter without a proxy card),” he said. “A review of records shows that Broadridge received eleven requests from September 1, 2007 to May 23, 2013, two of which were for the same meeting.”

In other matters, CII told the SEC that Broadridge has rejected a three-party confidentiality agreement that it worked on with Broadridge and the Society of Corporate Secretaries and Governance Professionals to facilitate the disclosure of preliminary voting information.

To contact the reporter on this story: Yin Wilczek in Washington at

To contact the editor responsible for this story: Ryan Tuck at

CII's letter is available at


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